What is a fixed Annuity?

A fixed annuity is a contract between an individual
and a life insurance company in which the individual
deposits an amount of money with the company. While
on deposit, the insurance company promises to pay
interest and ultimately provide payments of a fixed amount
over a specified period or throughout the lifetime of one
or more persons.

Annuities are currently the only
financial product that can guarantee income payments
that cannot be outlived.

Most people purchase annuities for long-term needs,
meaning they do not plan to make withdrawals or begin
receiving an income until some future
date.

Fixed annuity contracts guarantee a minimum rate of
interest, but the life insurance company can, and often
does, credit a higher rate. Annuities also have attractive
tax benefits that enhance the effect of interest earnings in
the contract.

Advantages of Tax Deferral

Interest earned in an annuity is fully tax-deferred until it
is withdrawn or received as income from the contract.
This allows the contract value to grow faster when compared
to a taxable investment, such as a CD.
Compare the accumulation of a single $100,000 deposit
on a tax-deferred basis with the accumulation on an aftertax
basis (assuming a 28 percent tax bracket). As you can
see, the longer taxes are deferred, the greater the benefits!

Advantages of Fixed Annuities:
1 Fixed annuities are a sound investment for your
clients who are less willing to risk market
fluctuations.
2 Fixed annuities are a safe and guaranteed way to
provide retirement income.
3 Most annuity contracts offer lifetime payments,
guaranteeing specified payments to your clients
until death.
4 Fixed annuities help clients by allowing them to
name a beneficiary and avoid probate. Fixed
annuities offer great flexibility and control in
distribution of assets to loved ones.
5 For even greater control and added flexibility,
fixed annuities allow owners to name a trust as
the beneficiary.
6 Fixed annuities offer safe, guaranteed, competitive
interest rates for growth and/or income; and under
current tax laws, owners pay NO income taxes on
gains until money is withdrawn from the annuity.
7 The interest earnings within a nonqualified fixed
deferred annuity are not counted toward income
that subjects Social Security benefits to income
taxation. If you shelter enough income in deferred
annuities and bring the owner’s income below the
current tax thresholds for a single or married taxpayer,
he or she may pay no tax (federal or state)
on their Social Security income.